By Jennifer A. Dlouhy and Naureen S. Malik, Bloomberg
The Trump administration laid out a plan intended to compel technology companies to effectively fund the construction of new power plants as a way to tame surging consumer utility bills while aiding the development of data centers.
The heads of President Donald Trump’s National Energy Dominance Council joined governors of several US states on Friday to announce an agreement urging the biggest US grid operator, PJM Interconnection LLC, to hold an emergency wholesale electricity auction later this year.
The unprecedented plan has two ambitious goals: First, it aims to accelerate the construction of new power plants needed to supply data centers that are crucial to the artificial intelligence boom. And second, it seeks to address growing tensions over who will bear the costs of rising electricity demand as consumers face higher utility bills.
“Energy cannot be separated from our economy,” Secretary of the Interior Doug Burgum said. “Reliable, affordable, secure energy is key to driving down inflation.”
The emergency auction would allow tech companies to bid on 15-year contracts for new electricity generation capacity, helping to secure supplies and curb price volatility.
PJM serves more than 67 million people from the Mid-Atlantic to the Midwest. The grid operator is already home to the world’s biggest concentration of data centers, in northern Virginia, and it has said it expects peak demand across its system to jump 17% by 2030 from this year’s high.
The plan’s unveiling Friday was attended by governors in the PJM territory, including Democrats Josh Shapiro of Pennsylvania and Wes Moore of Maryland as well as Virginia Republican Glenn Youngkin. The involvement of governors is seen by the Trump administration as helping to anchor the effort, since state policies have contributed to recent changes in power supplies.
Shapiro said that PJM has been too “slow to let new generation on to the grid at a time when energy demand is going up,” leading to higher prices.
Many power companies can’t shoulder the cost of building new generation without long-term commitments from buyers to purchase electricity. Meanwhile, PJM holds regular power auctions for electricity supplies in 12-month periods.
The Trump administration’s plan for a 15-year auction would secure revenue for more than a decade in a market notorious for price volatility and generator bankruptcies. In turn, tech companies would be able to lock in the electricity they need — and simultaneously, developers would likely have more confidence in the long-term outlook to take on the big investment of building more plants.
“Our messaging is just to try to push PJM — this 13-state region that manages the electricity grid — to say we know the answer,” Energy Secretary Chris Wright said.
Still, even with an emergency auction, it would be challenging to quickly ease surging consumer utility bills. There will still be a lengthy process before new power plants are built and more supplies enter the market.
–With assistance from Brandon Harden.
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